Alan Lovell, Chief Executive Of Jarvis: Highly regarded as a company doctor but can he work miracles?

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The Independent Online

Jarvis has not been a popular company over the past few years, either with the public, who will forever associate it with the Potters Bar rail crash, or with investors, who have seen the company's share price dwindle to a few pence short of nothing.

The company is leaking cash, an unexpected £80m outflow was announced on Monday, while its biggest shareholder, K Capital, bailed out of its 25 per cent stake on Thursday at a massive loss. So if Steve Norris, the ex-London mayoral candidate and Jarvis chairman, came knocking with the offer of the chief executive's job at the rail and road company most candidates would probably run a mile. Except one.

Perhaps he was the only candidate but, for whatever reason, Alan Lovell decided to take the job and, at the end of only his fourth week in charge, laughs heartily at having his sanity questioned. "I absolutely understand why people think it's strange I should want to take it on. My wife says she's glad I took the job. I get a buzz out of it.

"It was only 14 days from my first discussion with Steve Norris to attending the AGM and starting work so I was taking a lot on trust. I relish a challenge. I have played a lot of sport at a high level. I like competitive situations. The drive to survive and win runs very deep."

In fact Alan Lovell is a former real tennis champion, an Oxford Blue at the modern game and has a golf handicap that millions of Sunday players can only dream of. His first in classics from Oxford also proves he is not just your average, business-school jock.

He has also had Swampy - remember him - camping in his garden. The original eco-warrior was at the height of his media popularity during the protests over the building of the Newbury bypass, another contentious corporate escapade that Mr Lovell oversaw when supping his last-but-one poisoned chalice - chief executive of Costain, the construction group.

"We had Swampy and his friends camping in the garden, painting the house and the car, locking us in the house and out of the house, putting up banners, all that."

What Swampy did next was apparently a little more sinister. "Being met by him and his friends at Winchester station at 11 o'clock at night and enquiring about the health of my daughters aged 10 and 11 ... you can do without that."

Mr Lovell is one of the City's lowest-profile characters but is on the radar screen of every bank whose lending has gone awry. He is a company doctor - possibly miracle worker if Jarvis pulls through - and has revived both Costain and more recently Dunlop Slazenger after they suffered their own near-death experiences.

"I'm happy to be called company doctor but the way I do it is not perhaps classic. It's actually very important for me to be called company doctor because that implies saving the patient but also helping the patient to thrive and become healthy again, to grow. That's the role I like. What is certainly very satisfying is actively trying to save a company and trying to secure a future for it and its people. Although there are very tough times in dealing with people, my experience has always been that it's very easy to galvanise great team spirit in adversity, so it can be a very rewarding place to work from a personal relationship point of view."

At Costain he was brought in by NatWest and Morgan Grenfell as chief financial officer in 1992 and then appointed the chief executive in 1995. When he arrived, the company was losing £340m a year and net debt, at its peak, was £450m. He cut costs, restructured the business and focused it on engineering and construction. Debt was eliminated and new shareholders from Malaysia and the Middle East brought in.

"Jarvis is very like Costain, which got into trouble by making investments outside its core area of expertise which needed to be exited in order to refocus efforts on the core business, which is exactly the process we are going through with Jarvis."

Mr Lovell hopes he can bring in strategic partners to Jarvis as well, probably from Europe, that want to invest in the company's proprietary road maintenance and railway track laying technology. Could such an investor possibly buy Jarvis outright?

"No not necessarily. Maybe that's a possibility. At the moment I think certainly an attractive option is that they take a significant stake and we work with them."

Jarvis has debts of about £230m to £240m and an equity value of just £16m. Its two main lending banks are Royal Bank of Scotland (RBS) and Barclays. Both were lenders to Costain and RBS was also a lender to Dunlop Slazenger. Their appointment of Mr Lovell at Jarvis suggests they are reasonably confident his presence can prove a panacea.

So far Mr Lovell has identified £30m of cost savings on top of the £23m identified by previous management. The latest savings include relocating from London to York where most of its future road and rail operations are already based. It also means telling people they have lost their jobs. "The overriding fact is that people like to hear good news. They don't like to hear bad news but they would much rather hear it than just be uncertain. It is the uncertainty that is so devastating."

An initial three-week review by Mr Lovell has revealed that completing a number of construction contracts will cost Jarvis £80m more than thought, leaving £80m less to pay off the banks. "That means we will be left with a debt burden going forward which certainly is more than ideal and that probably means that this is not the end of the restructuring process. There will be another step to come."

This will take the form of a third round of cost savings although of a smaller scale than the first two rounds. But Mr Lovell's plans involve more than just cost savings. There will be disposals, most importantly the European roads business, its private finance initiative (PFI) operations and its £150m stake in Tube Lines, the consortium that runs part of London Underground.

"There are enough potential disposals, in particular the realisation of the value of Tube Lines, that will generate the cash required to deal with the initial problems and keep the banks happy and provide the basis for going forward."

The Jarvis of the future will be a UK infrastructure business which has about one-third of Network Rail's track renewal contracts. It owns state of the art equipment, including patented engineering processes, that Mr Lovell reckons will be key to Network Rail delivering new track on time and on budget.

On the roads Jarvis has a highway maintenance business with its own factory that manufactures anti-skid surfaces, reflective white-lining products and traffic calming products. "It is genuinely an engineering business rather than a contracting business with the results you would expect on profit margin potential and a sustainable future."

The new Jarvis business plan also envisages exporting this specialist rail and road know-how to Europe, particularly the accession states. "Poland is expecting to spend €100bn in rail infrastructure over the next 10 years and our chief operating officer just happens to be Polish."

While genealogy is not a strategy, Mr Lovell reckons there will at least be something left for his successor in the Jarvis hot seat to inherit.

Healing Hands

Post: Chief executive, Jarvis.

Age: 50 but his birthday is on Friday.

Education: Winchester and Oxford.

Career: Started out qualifying as an accountant with Price Waterhouse 1976-80. Moved to Plessey, the telecoms and defence group and became group chief accountant aged 28. In 1985 seconded to Kleinwort Benson as part of the team fending off GEC's bid for Plessey, which eventually succumbed to GEC and Siemens in 1989.

Appointed finance director then chief executive of Conder Group, the specialist construction company, where he slashed debt and jobs, sold subsidiaries and stabilised the business before the banks pulled the plug. Joined Costain in 1992, becoming finance director in 1993 and chief executive in 1995. Restored profits, paid off debt and brought in new shareholders. In 1997 became finance director, and later chief executive, of Dunlop Slazenger which was turned around from a £20m loss to an £8.2m profit.

Pay: Undisclosed as yet but basic pay in line with predecessor's £400,000-a-year. Performance related bonuses and share option scheme will be paid as well.

Family: Married with two daughters.

Hobbies: Real tennis, tennis, golf.